(Bloomberg) — Kenya’s biggest bank postponed plans to expand into Ethiopia, where a conflict between the federal government and a dissident region has resulted in hundreds of deaths and forced thousands to flee.
KCB Group Ltd. is waiting for the uncertainty caused by the coronavirus to settle before pursuing an entry into Kenya’s northern neighbor, Chief Executive Officer Joshua Oigara said. The Nairobi-based lender, which was looking to partner with an Ethiopian bank, will instead focus on the six markets it currently operates in, he said. “The conversations for Ethiopia are not continuing for now,” the CEO said in an interview, without referring to the incursion. “It will have to happen once we are clear about how the pandemic goes.”
The lender’s profit in the nine months through September declined 43% from a year-earlier after provisions surged amid the economic fallout of the coronavirus. Going into next year, the company is projecting some recovery in East Africa as the countries adapt to living with Covid-19. KCB will still be on the look out for opportunities for its existing businesses.
“We remain very optimistic in markets like Rwanda, where we have always been very interested in increasing our presence,” Oigara said. “We are very much interested in enhancing capability in Tanzania, and obviously also in Uganda.”
The company will need to cut staff, which accounts for almost 45% of total expenses, the CEO said, without providing more details. It will further reduce costs such as leases, meals and travel by December.
“We are also looking very strongly at our own technology investments as we migrate transactions in those areas,” Oigara said. “That will also reduce any additional staff costs.”
KCB’s shares have declined 30% this year, compared with a 14% drop in the Nairobi Securities Exchange All-Share Index.